Shares of Ideanomics (NASDAQ:IDEX) popped by as much as 14% this morning after the company announced it would acquire Timios Holdings, a title and settlement services provider. The stock has since given up much of those gains and was up just 3% as of 12:30 p.m. EST.
Ideanomics will buy the California-based company for $40 million in cash and will integrate it into the company's fintech segment. The company says the acquisition will improve efficiency and transparency in the real estate and mortgage industry. Ideanomics' main business is distributing commercial electric vehicles to industrial fleet operators in China.
"Timios fits perfectly within our model as a disruptive force in the mortgage and title industry, which currently has many antiquated processes that go against the trend toward transparency and freedom of choice," CEO Alf Poor said in a statement. "With this acquisition, we are onboarding a profitable business which has grown both its top and bottom line tremendously in 2020."
Ideanomics stock fell earlier this week after the company reported third-quarter results and disclosed that it had received a delisting notice from the Nasdaq after the share price remained below $1 for 30 consecutive business days. The company has until May 2, 2021, to regain compliance of that requirement.
In regulatory filings associated with the deal, Ideanomics also disclosed that certain controlling shareholders of Timios are also affiliated with YA II PN (YA), which is the counterparty to Ideanomics' standby equity distribution agreement as part of its shelf registration statement from June. YA has also invested directly in Ideanomics.